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Sawmills and Wood Production in the US Industry Market Research Report from IBISWorld Has Been Updated

In the five years to 2019, revenue is forecast to rise as the construction sector, particularly the housing market, continues to improve. For these reasons, industry research firm IBISWorld has updated a report on the Sawmills and Wood Production industry in its growing industry report collection.

New York, NY (PRWEB) March 15, 2014

The Sawmills and Wood Production industry, whose primary product is lumber, relies heavily on sales to the residential and nonresidential construction markets. As the construction sector faltered during the subprime mortgage crisis and subsequent recession, demand for lumber to frame houses and support other structures dramatically declined. “In recent years, the construction sector has started to recover as consumers gain employment, businesses earn more revenue and banks ease lending,” according to IBISWorld Industry Analyst Leah Goddard. In turn, greater construction activity has bolstered demand for lumber and other wood products, raising industry revenue. After dropping 22.8% in 2009, revenue is forecast to increase at an annualized rate of 5.6% over the past five years. Following growth of 12.2% in 2013, revenue is expected to increase another 2.1% to $27.2 billion in 2014.

The collapse of the housing market also decimated profit margins, as decreased demand led companies to undercut competitors' prices to attract customers. In response to strenuous operating conditions, the industry consolidated over the period. “Struggling enterprises were either acquired by larger players or were so financially devastated that they were forced out of the industry altogether,” says Goddard. As a result, the number of companies participating in the industry is projected to decrease at an annualized rate of 1.3% to 3,043 enterprises in 2014. However, as unprofitable competitors dropped out of the industry and demand from the construction sector improved, profit margins rebounded over the period to 5.9% of revenue.

In the five years to 2019, revenue is forecast to rise as the construction sector, particularly the housing market, continues to improve. Additionally, remodeling activity will rise along as home values and disposable incomes trend upward. The value of nonresidential construction will also increase, and this growth will be particularly important as it represents the industry's largest opportunity for market share expansion, according to the Binational Softwood Lumber Council. Global demand for lumber will also raise industry revenue through exports, which will be driven by growing demand in emerging economies such as China and Mexico.

For more information, visit IBISWorld’s Sawmills and Wood Production in the US industry report page.